Research by Harvard’s Gita Gopinath and Chicago Booth’s Brent Neiman indicates that United States residents are bearing the vast majority of the economic burden associated with recent trade tariffs. This finding directly contrasts with political rhetoric suggesting that foreign governments or offshore suppliers would primarily absorb these costs.
During the first administration's trade actions, the trade-weighted average statutory tariff rate roughly doubled, reaching 4% by 2019, with 80% of those costs passed through to US importers. The subsequent tariff regime announced last spring significantly increased rates across 88 countries and 77 product categories, pushing the average statutory rate to 27% by September.
However, the Treasury collected import duties at only about half the announced statutory rate due to exemptions and enforcement gaps, which may have tempered immediate inflationary warnings. Despite this, the analysis of 2025 data shows that 94% of the tariffs were passed along to US buyers, according to the researchers’ preferred methodology using census trade data.
Foreign exporters provided minimal relief, with data suggesting they reduced prices by only about six percent of the tariff size during the analyzed period. Consequently, a 10% tariff resulted in US importers paying approximately 9.4% more for the affected goods, highlighting high pass-through rates.
Sectors facing the largest tariff increases experienced pass-through rates ranging from 90% to 114%, according to supplementary calculations utilizing Bureau of Labor Statistics import price data. This high incidence suggests that tariffs are affecting US producer prices, especially since many imports function as intermediate inputs for domestic manufacturing.
Importers demonstrably adjusted trade flows in response to the increased costs, most notably shifting spending away from Chinese goods. China’s share of US imports plunged from 12.5% at the end of 2024 to a range between 7% and 10% in recent months, as reported by the study tracking trade data.
The study, detailed in the working paper “The Incidence of Tariffs: Rates and Reality,” provides early, though potentially incomplete, measures of the economic incidence. Regardless of minor methodological caveats, both analytical approaches strongly confirm that import price pass-through remains substantially high in both tariff episodes examined.
